The ambitious effort to remake downtown's Grand Avenue into a $2-billion cultural and retail hub designed by Frank Gehry is over budget and behind schedule, with the developers saying the project "is not economically feasible" without tax breaks from the city, according to documents obtained Thursday.
The developers said they are negotiating with the city for temporary rebates of more than $40 million on hotel and parking lot taxes.
They said such concessions are needed to make the project work financially. The complex is to include eight high-rises and retail pavilions around Gehry's landmark Walt Disney Concert Hall.
Phase One -- which includes the architect's dramatic glass-curtained 47-story tower, a 24-story tower and shopping areas -- was supposed to break ground as early as next month. But officials now say it will be delayed at least until October and possibly beyond.
The developer's request for the tax rebates was criticized by some community activists, who have already questioned whether the city and county governments are getting a good deal under the complex financing plan.
The request is the latest of several tie-ups involving the plan's fine print that have caused delays and left some Grand Avenue supporters concerned.
The situation mirrors a slowdown in downtown Los Angeles' once red-hot construction market. A Times review of approximately 100 residential and commercial developments downtown shows that about 20% are behind schedule. Though parts of the city center are abuzz with heavy construction, some real estate specialists say a slowdown is apparent.
"It has gotten to the point where with ... huge construction costs combined with huge land costs and a flat sell-out rate, it just doesn't pencil out anymore," said Mark Tarczynski, a senior vice president at CB Richard Ellis.
In recent months, relatively few new projects have been announced, Tarczynski added. In addition, he said, "you're seeing a lot of projects getting theoretically put on hold. Most do not want to admit that their projects are put on hold. You don't see anything happening."
Some experts are skeptical about several huge projects announced with much fanfare, including a 50-story condo development near the Civic Center and twin residential towers near the Harbor Freeway.
